The $2.5 bn Kudankulam nuclear power plant is set amidst very picturesque surroundings, just 25 km away from Kanyakumari, India’s southernmost tip and famous pilgrimage destination. Notwithstanding the beauty and general serenity, locals have been up in arms (not for the first time) over the 2,000 MW Government-owned project that is all set to start generating nuclear power shortly. The protests gathered steam after the March 2011 Japan’s nuclear power plant disaster (fresh questions around the safety of a coastal installation were there to be a tsunami or the like) and had the added benefit of some political tailwind.

There are two issues as IndiaSpend sees it, first: is nuclear power safe, which we are not equipped to answer. Second, can we afford it? There we are a little better equipped, at least to ask a few questions.

Before we proceed, let’s first look at the numbers, the scheduled start date for generation and the revised start date.

So, the table tells you that the first reactor of 1,000 MW was supposed to go on-stream in December 2007. The second, also of 1,000 MW, was supposed to go on-stream in December 2008. What we have here now is launch dates of March and December 2012, which are almost 4 years behind the original dates. That is assuming all goes smoothly and there are no further delays. Of which there is no guarantee.

Falling Behind Schedule

Still sticking to official records, the project was kicked off in 2001 and the first concrete pour happened on 31 March 2002, with a target date of 2007. Thus, a build that was originally envisaged at 6 years has now turned into a 10-year exercise, at the least. The intent to set up the project dates further back, to 1988, when Prime Minister Rajiv Gandhi signed an agreement with Soviet President Mikhail Gorbachev. After which, the Soviet Union disintegrated.

Kudankulam’s reported project cost has varied between Rs 10,000 crore ($2.2 bn) and Rs 11,500 crore ($2.5 bn), depending on which report you read. It would also appear that costs are virtually unchanged over the years, despite the evident delays. You can find a lot of numbers in the Nuclear Power Corporation’s (the Government body that owns and manages all nuclear power plants in India) balance sheet but not a clear project wise cost breakdown.

Here is where we refer to a most interesting 2007 Greenpeace study of the cost of nuclear power. Greenpeace said that an assessment of 75 reactors in the US showed predicted costs to have been $45 bn while actual costs were $145 bn. In India, said the same Greenpeace report, `completion costs for the last 10 reactors have averaged at least 300% over budget.” One reason, according to Greenpeace: the average construction time for nuclear plants world over increased from 66 months in the 70s to 116 months (nearly 10 years) for completions in between 1995 and 2000.

Ever Increasing Cost Of Production

Meanwhile, Greenpeace pegged the cost increases for India from 176% to 396% with several plants over the 200% mark. Greenpeace said costs for Kaiga I and II plants in Karnataka went up 396%, from Rs 731 crore to Rs 2,896 crore. These are 220 MW plants (making it approximately Rs 6.6 crore per MW) and began commercial operation in March 2000. Not very long ago. Greenpeace’s 2007 report puts India’s nuclear power capacity at 3,483 MW against the current capacity of 4,780 MW (see table below)

To be fair, it’s not just nuclear power plants that are delayed. Several privately owned power plants, including those proposed by the Reliance ADAG and Tata Group are equally if not more delayed, for similar reasons too; namely local opposition. The difference is nuclear power is Government-run and thus tax-payers money. The struggling thermal power plants are privately funded. The Nuclear Power Corporation (NPC) does take pains to point out that it has not touched the public purse for the 7th consecutive year now.

Now, let’s look at nuclear power in the context of overall power generation capacity. India has a total power generation capacity of approximately 190,000 MW.

Now let’s look at the capacity addition plan for the XI Five-Year Plan

Bleak Future For Nuclear Energy?

So, nuclear power is not something the system is betting big time on. As it appears, India has more renewable energy than nuclear power already, by a factor of 4. Moreover, fuel can be an issue. For the last few years, most nuclear power plants in the country have been working at 60% or less plant load factor because of imported and domestic fuel shortages. The US-India nuclear deal helped improve flow of imports with consignments from France and Kazakhstan, according to this report. So, NCPIL’s average plant load factor (PLF) went up from 61% for 2009-10 to 71% in 2010-11. While output was up 41%, says NPCIL.

For those who wish to take the helicopter view, even globally, nuclear power is only 14% of total power generation with 440 power plants, of which approximately a little over 100 are in the US. India has 20. That number is unlikely to go up in a hurry, what with countries like Germany talking about phasing down. Nuclear power contributes to 23% of Germany’s total electricity consumption; it’s shutting down 7 nuclear plants and talking of shutting the remaining 10 nuclear power plants by 2022.

German Chancellor Angela Merkel said recently, “”We don’t only want to renounce nuclear energy by 2022, we also want to reduce our CO2 emissions by 40 percent and double our share of renewable energies, from about 17 percent today to then 35 percent.” Of course there will be a sticker shock but that’s another story. So, while IndiaSpend is not arguing for shutting down nuclear power plants, the fact is India’s own ambitious nuclear power projects will face opposition as well as delays. This could mean an incessant drain on taxpayer money for the foreseeable future. And the Government’s ambitions seem excessive. For instance, Kudankulam is projected to go to 6,000 MW and a new one in Jaitapur on the western coast of Maharashtra was 1,650 X 6 plants or almost 10,000 MW, large by any stretch. Jaitapur too is grappling with local protests which for now are showing no sign of abating.

To sum up, using Kudankulam in the backdrop, here are some questions.

1. How much money has been spent in and on Kudankulam till date?

2. What was the cost of the land at Kudankulam and new sites like Jaitapur?

3. What would have been the cost of the reactors, if India did not have an agreement with Russia? As in, what is the monetised value of the transaction, subtracting concessions et al ?

4. How does a project like Kudankulam compare with a comparably sized thermal plant today?

5. If renewable energy capacity is higher already in India, then why not invest more money there? What are the learnings from countries like Germany?

6. What are the realistic chances that any more nuclear plants will come up? To that extent, should be investing more or better looking after the existing capacity?

7. Are there other benefits of sticking to a nuclear power programme, particularly if there is no real cost benefit and the public is unlikely to feel any safer in coming years?

8. Finally, what is the strategic thought if there is a complete halt on fresh nuclear power capacity, for legislative or for practical reasons?

Answers to these questions will help understand why we want to stay so firmly invested in this space, because it sort of flies against conventional logic. One must also acknowledge that nuclear energy benefits from subsidies in many countries. Though the key issue is whether the same subsidies could go elsewhere. The radical though feasible solution is to re-mandate, re-skill and re-focus organisations like NPC and its talent pool on renewable energy, which is not an impossibility by any stretch. It’s not that the NPC does not believe in other renewable energies. As it happens, its success includes a 10 MW wind power plant, right at Kudankulam, the hotbed of the current controversy. It also so happens the blades are already turning and the windmill is generating electricity.